donderdag 26 februari 2015

Fokker: “a company with a long track record of deceit and illegal behavior”

In his Opinion of February 5, 2015
U.S federal judge Richard Leon refused to approve a settlement for
sanction violations by the Dutch aerospace firm Fokker Services,
daughter of Fokker Technologies Holding B.V with the US Government.
Fokker is a key Dutch defence company.
The company was accused of more than 1,100 illegal shipments worth
$21 million to Iranian customers, including the military, and to
embargoed customers in Sudan and Burma in the period 2005-2010. Fokker
agreed to forfeit $10.5 million and pay a civil fine of $10.5 million as
a settlement.

But
according to judge Leon, this settlement, made in June last year, was
too lenient: “It would undermine the public’s confidence in the
administration of justice and promote disrespect for the law for it to
see a defendant prosecuted so anaemically,” he wrote. He especially
referred to the deliverances to Iran to underpin his words.

Fokker cooperated in the investigation and promised to better its
life. The US-government left the verification of these promised
improvements however to self-reporting of the company. “The [Deferred
Prosecution Agreement] DPA does not call for an independent monitor, or
for any periodic reports to be made to either this Court or the
Government verifying the company’s compliance with U.S. Law” wrote judge
Leon, making clear his discomfort: “One can only imagine how a company
with such a long track record of deceit and illegal behaviour ever
convinced the Department of Justice to agree to that!”

The facts which made judge Leon deny the settlement came from
information filed by the US Government. According to these, Fokker
Services withheld or falsified tail numbers of planes. Falsely indicated
parts were presented as “stock parts” to conceal its customers'
affiliations with U.S. sanctioned countries. The Dutch company deleted
references to Iran in materials sent to US companies. Employees were
directed to hide activities and documents relating to Iran from US
officials. Etc. This policy was at least partly known and approved by
the senior management of the Dutch aeronautic company.

US Attorney Machen said:
“Fokker treated U.S. Export laws as inconveniences to be 'worked
around' through deceit and trickery.” In 2008, Fokker had already been warned by Dutch customs
that they would not be able to defend the company “if it encountered
problems with United States authorities regarding export compliance.”

Although the Attorney gave lip service
to strong punishment of companies seeking “profit from violating and
circumventing US trade laws” in the end Fokker has hardly been punished.
Fokker Services fired a president, reassigned the duties of some of its
personnel and promised to train employees in US export controls and
economic sanctions. A program which is e.g. available every year in Amsterdam.
The company had to pay a fine which was only as high as the value of
its illegal transactions, “not a penny more than the revenue it
collected from its illegal transactions,” judge Leon stated in his
Opinion. The statement by Fokker
that the figures are “speculative assumptions and amounts, not based on
facts” is clearly inadequate. According to the Washington Post,
punishment was minimal because more massive financial penalties would
have severely hurt the health of the company and would have been a
disproportionate penalty for its conduct. What will happen now must be
awaited. Judge Leon remains open to approving a modified plea agreement. Fokker itself decided to file a Notice of Appeal.

Fokker is not just any company. It is part of the Dutch defence
establishment, and is strongly linking the US to the Dutch military
market. This provides another logical explanation for the fact that,
despite the severe violations of US export law, punishment was so
minimal. When searching the website of the US Department of Defence on
Fokker, one finds as many as 351 results.
Fokker is participating in major US weapon programs, such as the F-16,
F-35 Joint Strike Fighter, Chinook helicopters, Sea Sparrow and PAC-3
missiles, and is thus part of the Atlantic bond between the US and the
Netherlands. In January, it signed its most recent public contract with Lockheed Martin on wing components for the Joint Strike Fighter. Thus a company to handle with prudence.

In any debate on arms exports in the Dutch Parliament it is at least
stated once that Dutch arms exports are according to the rules and that
Dutch companies are behaving according to the law. This story shows a
major Dutch defence company using tricks an deceit to trade its
products. A bit more professional scepticism on the side of the Dutch
parliament according to the spotlessness of Dutch defence companies
would be wiser.

Late February, Fokker Elmo (also a daughter of Fokker Technologies) announced to start to market defence products in a Joint Venture with the Indian company SASMOS HET Technologies Ltd.
India is known for its endemic corruption in the defence business. And
there is another issue at stake too. As part of the joint venture deal,
Fokker Elmo will transfer technology to its Indian partner as and when
required. The question is if the end use of this technology will be
controlled seriously, and if the Dutch parliament will be critical
enough to monitor this.